Lloyd's prepared for challenges to business model: Guy Carpenter
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Lloyd's of London is well-positioned to address challenges to its business model, according to a report released Tuesday by New York-based Guy Carpenter & Co. L.L.C., a unit of Marsh & McLennan Cos. Inc.
A combination of record catastrophe losses, middling economic growth in developed markets, and uncertainty surrounding the euro are exerting pressure on Lloyd's, the report, “Lloyd's of London: A Vision for Targeted Growth,” finds.
“Throughout its nearly 325 years of existence, Lloyd's has endured many challenges to evolve into the dynamic marketplace it has become today,” the report states. “In the current environment, Lloyd's—as the rest of the (re)insurance sector—faces the prospect of subdued growth in established markets.”
About three-quarters of Lloyd's business in 2011 was conducted in developed markets such as the United States, Canada, the United Kingdom and Europe, the report notes. However, Guy Carpenter says that a strategic plan Lloyd's outlined in May, < ahref="/article/20120513/NEWS04/305139984">Vision 2025, should help it maintain its status as a global hub for specialist insurance and reinsurance. The plan calls for Lloyd's to consolidate its presence in established markets while leveraging its expertise and brand recognition to facilitate targeted growth in emerging economies.
Matthew Day, senior vice president and EMEA business intelligence practice leader for Guy Carpenter, said it is essential for Lloyd's to balance its need for growth and diversification with diligent risk management.
“Lloyd's has remained resilient in spite of challenging global market conditions and significant catastrophe losses, but will need to continue to expand its global reach in order to maintain this competitiveness,” Mr. Day said in a statement. “The Vision 2025 plan provides a clear roadmap for Lloyd's to leverage its existing structure and strengths to break through to a new frontier of diverse emerging economies.”
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